How to get good deals on international money transfers

Billions of dollars is sent in international money transfers every year but there are some ways consumers can get badly stung if they don’t watch out.

Australians send a whopping $21 billion in international money transfers each year but experts say they can easily get gouged.

The costs involved to transfer money abroad has come under intense scrutiny by the consumer watchdog, the Australian Competition and Consumer Commission.

In a recent report they found in 2017-18 consumers who moved money using the big four banks could have saved $150 million if they used a cheaper IMT supplier.

Most people who do money transfers are sending funds to family or friends.

This is what you need to know.

Transferring money overseas can be expensive so it’s important to shop around.

1. HOW DO YOU TRANSFER MONEY?

There’s many ways to shift money overseas – either using your existing bank, money transfer companies or other online sites.

The Currency Shop’s director Justin Rampono says “instead of using a BSB and account number you will need the recipient’s bank code and bank account number”.

“It’s usually more expensive to do it through your own bank otherwise you could use a money transfer company or service,” he says.

Some of the well-known sites include TransferWise, OFX and XE Money Transfer.

Users can sign up to their chosen site by providing personal details including name, address, email and phone number.

The user then needs to input where the money is going, i.e. the recipient’s banking information and the payment can be made using their own debit or credit card.

2. EXCHANGE RATES/FEES

Rampono says consumers must keep a close eye on the exchange rates because they vary greatly.

“Unfortunately everyone offers a different exchange rate, when sending money overseas you want the rate to be as high as possible,” he says.

“You might do a search and see the currency rate online on Google or XE but then when you go to the transfer with the company it’s different, that’s because there’s a cost to you.”

Transfer fees usually apply for each transaction – these may be a flat fee of for example $15 or a percentage-based fee.

Sending money overseas shouldn’t cost you an arm and a leg. Picture: iStock

READ MORE:

Easy ways to split the bills and save

Buy now pay later users are paying more for goods

Why it matters where you spend your money

TransferWise country manager Tim Cameron says there’s a huge problem with high fees.

“This is where consumers get taken for a ride,” he says.

“Customers should be wary where it says there’s no fees or zero commission because that’s nearly always a company where there’s an asterisk and small print saying, ‘we make money through the exchange rate’.”

Cameron also says to make sure the amount transferred is guaranteed at the time you set up the transfer and it doesn’t change.

“You want to make sure the exact amount they tell you is the amount that is going out, because some providers will say it’s indicative at the time of setting up the transfer,” he says.

“That can cause issues especially if you are paying invoices and a little less money arrives.”

Consumers should use online calculators or IMT comparison websites to do the maths and work out which option is best.

3. ALLOW TIME FOR THE TRANSFER

Depending on where the money is being sent the time it takes to arrive to the recipient varies.

Cameron says it can be instant or is usually done within the same business day.

“We tell customers upfront how long the transfer is going to take and we’re really on a mission to make international money transfers instant,” he says.

“Over 30 per cent of our transfers globally are transferred in under 20 seconds.

“The limitations are on the payment systems at each end.”

@sophieelsworth